Cuba: Shifts in the U.S. embargo and the Brazilian connection

One of the most important developments coming out of the Americas in the last few weeks has been the realisation within certain influential sectors in Washington that the U.S.’ 50 year plus economic blockade on Cuba is now working against its own economic interests and giving Brazil a considerable geostrategic advantage in the region. While punishing Cuba for carrying out a widely popular revolution in 1959 had its own logic so as to remind the rest of Latin America and the Caribbean that they best not even dream of challenging the U.S.-led Cold War status quo, the reality of the region is now remarkably different to the era when Fidel Castro and the 26th of July Movement overthrew the brutal U.S-backed dictator Fulgencio Batista.

With a wide range of left and centre-left governments in power in Latin America, within recent years the region has witness the creation of the Bolivarian Alliance for the Americas (ALBA, 2004), the Union of South American Nations (UNASUR, 2008) and most recently the Community of Latin American and Caribbean States (CELAC, 2011). When the U.S.-dominated Organization of American States (OAS) – the key forum for inter-American discussions during the Cold War – permitted the readmission of Cuba into its ranks, Havana simply said thanks but no thanks.

While Venezuela under the late Hugo Chávez led the charge in the promotion of regional integration both on an ideological level and through its oil diplomacy, Brazil has also played a key role in flexing its new found economic might. From 2003 to 2010 Brazil invested over $10 billion in regional construction works in Argentina, Bolivia, Colombia, Cuba, Ecuador, Peru and Venezuela among others. Defying the U.S. economic blockade on Cuba, in the last 5 years the Portuguese speaking country has invested $957 million in the deep water Mariel port project.

U.S. business leaders and policy makers would obviously be aware of these developments. In a recent article in the conservative Americas Quarterly, the title of the piece summed up the situation accurately: ‘Brazil Sambas with Cuba, the U.S. Dances Alone’. Noting that one Cuban economist indicated that the island’s main benefactor was now Brazil and not Venezuela, the article went on to state that:

Sadly, the U.S. is bound up in a half-century-old policy toward the island and has been pushed to the sidelines. This is more than just economics; it has to do with political influence in the hemisphere. And on this, the U.S. is on the losing side of history.

In a recent open letter sent to President Barack Obama, a group of 44 former high-ranking U.S diplomats, civil servants, military officers and Cuban-American businessmen led by former Director of National Intelligence John Negroponte (a former Cold War warrior who had a fondness for death squads in Central America in the 1980s) noted that: “The U.S. is finding itself increasingly isolated internationally in its Cuba policy”. In a further development Thomas Donohue – president of the U.S. Chamber of Commerce – travelled to Havana last week and met the island’s leader Raúl Castro. According to this body the U.S. embargo on Cuba results in a financial loss to the U.S. economy from $1.2 to $3.6 billion annually.

Returning Cuban-Brazilian relations, according to Domingo Amuchastegui – a former Cuban government defector now turned analysis – while Brazil’s national oil company Petrobras originally invested in deep offshore oil drilling in Cuba, and then withdrew after some initial setbacks, the Brazilians have returned in force to the island – in particular to the Special Development Zone of Mariel (ZEDM). Amuchastegui writes that:

Since last year, various high-level Cuban delegations have criss-crossed the Brazilian financial triangle (Rio de Janeiro- São Paulo-Porto Alegre) explaining the potentials and incentives of the ZEDM. Partly as a result of these investments, trade with Brazil has crossed the half-billion dollar bar. Knowing perfectly well how Brazilian corporations have successfully expanded abroad over the past 40 years, it’s rather difficult to imagine that the Brazilian government may be throwing away big money in Cuba, just for the sake of being nice and friendly, or out of past political affinities. I could speculate over Brazil’s strategic reasons for investing in Cuba — the island nation’s reinsertion in the Interamerican system and the Revolution’s appeal among Latin Americans, the European Union’s rapprochement to Cuba, the reforms and changes taking place in Cuba, the economic potentials of Cuba within the Caribbean region, the close relationship of Cuba with some of Brazil’s most important partners (China, Venezuela, Bolivia, Ecuador, South Africa, Angola, Russia, India), not to mention special Brazilian domestic considerations.

But the fact remains that between the Petrobras withdrawal and the support of Mariel, a significant change in Brazilian policies toward Cuba has taken place.

Moreover — as Rousseff gets ready for her reelection campaign — Brazilian authorities took the most unexpected decision of all: A massive call for thousands of Cuban doctors to assist the healthcare needs of Brazil’s poor, at an estimated cost of $520 million and up per year and the political price of Brazilian physician guilds’ wrath. This is a step that not even Lula had dared to implement in his two mandates.

Brazilian officials are now talking tough. Rousseff advisor Garcia recently stated that “sympathy for Cuba (…) runs deep in Brazil and other Latin American countries that reject the U.S. trade embargo.” And in regards to internal issues of Cuba, he did stress that, “We will not tell [the Cubans] what to do.” This is an explicit and most unusual statement, contrary to the United States’ and European Union’s policy of interference in domestic affairs of Cuba.

With Brazil and several Latin American countries on Cuba’s side, it looks like the Washington will sooner rather than later have to come to grips with the new regional political and economic landscape and lift its harsh economic blockade on the island.